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Indiana Launches LEC Competition

Fortnightly Magazine - October 15 1996

The Indiana Utility Regulatory Commission (URC) has opened the state's local telephone market to competition by ordering local exchange carriers (LECs) to offer "bundled resale" of retail local exchange and related services.

The ruling applies to the state's two major LECs, Ameritech and GTE North, as well as to other smaller companies subject to the provisions of the federal Telecommunications Act of 1996 (Act). (Of the state's 40 LECs, all but two are considered "rural" carriers qualified to seek exemption from the new federal telephone reforms.) The ruling permits resale competition in the service territory of any LEC that does not seek an exemption from the federal rules.

In setting prices for wholesale services offered by incumbent carriers, the URC noted that the Act requires regulators to impose retail rates less "avoided cost" in pricing resale service offerings. It rejected a call to exempt from the resale requirement services currently priced below cost by incumbent LECs. The URC also set a price floor for offerings from newly certificated carriers, and prohibited cross-subsidization in rate structures to prevent "unfair price undercutting by the new competitors." Re Local Tel. Exch. Competition, Cause No. 39983, July 1, 1996 (Ind.U.R.C.).

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